Microfinance, SME banks in rural areas to facilitate farmers

Farmers need microfinance and SME (MSME) banks in rural areas to meet their financing needs at affordable rate to replace the middlemen system prevalent in rural areas.
President UNISAME Zulfikar Thaver urged the government to facilitate the SME farmers to enable them to come out of the dependency on middlemen (arthis) by financing them with different kinds of financing for purchase of fertilizers, seeds, fumigation insecticides, logistics, milling and processing at reasonable mark up.
SME farmers need finance for various purposes from sowing, cultivation, harvesting to marketing and the middlemen provide fertilizers, seeds, insecticides, milling services but in return tie up the entire crop which the SME farmer is compelled to handover to the middlemen. Kanyolal Mandhwani from Bagharjee in Sukkur said the middlemen are just one call away and available for all kinds of financial needs of the micro to medium farmer and give them loans for personal and family needs as well, all against the expected crop.
The main issue is the high cost of finance. The middlemen adds substantially to the prices of the items supplied to the farmer as mostly all financing is done in the shape of seeds, fertilizers, insecticides, packing material, storage services rent, milling and processing.
It was concluded at the meeting that to replace the middlemen the bank branch managers will have to become farm managers and facilitate the farmers in all aspects of farming inputs.
The banks for financing the farm sector will be comfortable when their risk of disaster and death is covered by insurance.
The UNISAME committee will recommend all types of insurance for crop, cattle and poultry by low premium insurance by the government to promote the farm sector.
Thaver as chairman Capacity Building Working Group (CBWG) under the National Financial Inclusion Strategy (NFIS) said to achieve financial inclusion of all segments of society it is very important to begin from grass root level and the primary sector needs special attention as it is the source of raw material.
Welcoming the Asian Development Bank (ADB) and its consultants to Pakistan, he said we look forward to our official meeting with them on 1st February 2017 at UNISAME office and we have decided to present our recommendations for disaster relief finance (DRF) and also an alternate to middlemen finance to the ADB team.